While these production figures are disappointing, at this very early stage we are tentatively expecting a rebound in the
2016/17 season.

European and Russian beet plantings are expected to increase; in the European case ahead of sector reform in October 2017,
in Russia’s case owing to strong domestic prices.

Cane sugar’s prospects in 2016/17 are highly dependent on performance in CS Brazil, where a record crop is hoped-for, and
India, where the monsoon is critical to the outlook.

Consumption

We estimate sugar consumption in 2015 at 181.7m
mtrv
, a 1.5% increase year on year, and 2016 consumption at 184.4m
mtrv
(also 1.5% growth).

This is below the 2% recorded over the three preceding years owing to the slowdown in emerging market GDP growth and the
reduced spending power of major oil economies.

Global population growth remains at around 1% per annum, and so per capita sugar consumption grew in 2015 and is expected
to continue to grow in 2016.

Thailand

Cane performance in Thailand has been affected heavily by drought.

Despite a 4% increase in cane acreage this season, only 10.4m
mtrv
of sugar has been produced in 2015/16, down from 12.1m
mtrv
last year.

Given the strength in the 2016 whites premium we believe that the Thai remelt of raws into whites will remain high, at around
3m tonnes.

India

We have downgraded our view on the Indian crop to 29.0m
mtrv
; in our last forecast in November we believed that production would reach 30.4m
mtrv
.

This followed minimal winter rains, which worsened the effects of the poor monsoon.

We are unlikely to see a crop recovery next year; farmers have struggled to plant cane for 2016/17, while ratoon yields could
be poor following drought.

We therefore expect India to be in domestic deficit in 2016/17, and potentially a world market sugar importer.

China

Following a wet start to harvesting in the largest cane state of Guangxi, we have downgraded our production forecast from
November’s 10.1m
mtrv
to 9.6m
mtrv
today.

Mills across the country have also been closing earlier than usual. In Guangxi, 78 of 92 mills had stopped crushing for the
season by 23rd March vs. 56 at the same stage last year.

This leaves a domestic deficit of more than 7m
mtrv
, which has in part been met by an increase of smuggling of white sugar into the country.

Cane prices this season have been higher than last year’s, and so we may see farmers planting a little more acreage to cane.

However, it’s difficult to see a substantial increase in the coming 2016/17 season and China is likely to remain in deficit.

Centre-South Brazil

The end of the 2015/16 CS Brazilian crop was heavily rain-affected, with mills being unable to crush the full cane quantity
available owing to one of the wettest Novembers on record.

Sugar production ultimately barely exceeded 31m tonnes in 2015/16.

Because of the cash flow pressures on parts of the CS Brazilian cane industry a higher proportion of mills than normal were
crushing by the end of March 2016.

April sugar production could be 400k tonnes above last year’s and the best since 2013/14.

Given the weakness in the BRL, sugar returns to mills today are as good as they were during the bull market of 2010 and 2011.

Consequently, most analysts are assuming a high sugar mix.

We believe that mills have reduced maintenance during the off-crop and so will need to stop more frequently in-season.

We have also seen in previous seasons that mills are willing to forgo some sugar revenue in order to produce ethanol, which
often provides faster cash generation.

Consequently, we believe that sugar production this season will be 34.2m tonnes, the highest since 2013/14.

“In the short term sugar prices could reflect the strong start to cane crushing in CS Brazil. However, sugar production globally
has stagnated in recent years while consumption has continued to grow. As the market transitions further
into deficit in 2016 we need sugar prices to rise to encourage fresh investment in sugar production around
the world.”
Stephen Geldart, Analysis Manager

Conclusion

The 2015/16 season will be in production deficit of 11.4m
mtrv
, which is one of the largest deficits that we have ever seen in the sugar market.

Attention will soon focus on prospects for the 2016/17 cycle, not least because the CS Brazilian 2016/17 crop is already
underway.

It appears that sugar production growth in CS Brazil will be robust this year; potentially enough to account for the forecast
3m
mtrv
year on year increase in global consumption.

However, across the rest of the world’s major sugar producers the outlook is a little less encouraging for 2016/17.

Last year’s failed monsoon in India will have had an impact on 16/17 plantings.

Thai crop prospects for next year are already being downgraded following this year’s drought.

Therefore, at this early stage it looks as though the sugar market in 2016/17 will also be in deficit, potentially of a similar
magnitude to that seen in 2015/16.

We believe that global sugar stocks at the start of the 2015/16 cycle were at the same level as they were at the start of
the 2008/09 cycle.

The fact that consumption today is 184.4m
mtrv
compared to 165.1m
mtrv
in 2009 means that the sugar stocks-to-use ratio will be driven even lower than in the last bull phase.

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